By Dimitra DeFotis

Shares of Lululemon Athletica moved higher even though it reduced its profit outlook for the year.

Investors may be relieved that the news wasn’t any worse regarding its recall of black Luon yoga pants, announced earlier this week. Lululemon said Thursday that it expects same-store sales growth will be cut roughly by half from previous projections due largely to its recall of the sheer-fabric yoga pants.

Lululemon Athletica (LULU) shares rose 39 cents, or 0.61%, to $64.27, after reporting a 48% rise in year-over-year net income in the latest quarter (press release here). That result, and profits for the full fiscal year that just ended, were each a penny better than analysts expected, according to Thomson Reuters.

The athletic garment company, known for its yoga attire for women, reported net income of $109 million, or 75 cents per share, up from $73.5 million, or 51 cents, in the year-ago quarter.

It projected same-store sales growth of between 5% to 8% in the first quarter — it had expected 11% growth — and said earnings would come in at between 28 to 30 cents a share. Analysts were looking for 40 cents. For the full year, Lululemon projected earnings per share of between $1.95 to $1.99. Analysts on average had been looking for Lululemon to earn $2.17 per share in the coming year.

Analyst Brian Sozzi notes that for “yoganistas … luon pants are a basic, traffic-driving item that gets consumers thinking about tops and accessories.”

“Fiscal year 2013 earnings guidance above consensus is trying to project confidence to the Street in a mid-year reacceleration in same-store sales and margins as structurally correct black luon pants are flowed into stores and available online. Perhaps too much confidence seeing as Lululemon’s operational miscue has opened the window wide for competitors to showcase their newest yoga efforts for spring, AND considering the company’s 49% inventory increase compared to a +5% to +8% 1Q13 same-store sales outlook (are their markdowns in the assortment from the fourth quarter? Other products in inventory that maybe are at risk of quality issues?) Another mysterious decline in Lulelemon’s income tax rate questions the quality of the minor earnings beat relative to expectations.”

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